Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: No reconsideration of state antitrust claims dismissal in Niaspan reverse payment suit, (Dec 9, 2015)

By Linda O’Brien, J.D., LL.M.

In a class action by direct purchasers and end payors of the brand name drug Niaspan against the drug manufacturer for entering into a reverse payment agreement with a generic manufacturer to delay market entry of a generic version of Niaspan, the federal district court in Philadelphia has denied reconsideration of its order dismissing the end payor plaintiffs’ state antitrust claims for lack of standing (In re Niaspan Antitrust Litigation, December 8, 2015, DuBois, J.).

Kos Pharmaceuticals markets and sells Niaspan, a brand name drug primarily used for the treatment of lipid disorders, such as high cholesterol. The active ingredient in Niaspan is niacin. In 1990, Kos developed a time-release version of niacin and was issued several patents for the development of various dosages of Niaspan. In 2001, Barr Pharmaceuticals filed an abbreviated new drug application with the FDA, seeking to manufacture a generic equivalent to Niaspan. Kos filed a series of patent infringement suits against Barr, alleging infringement of its Niaspan patents. Subsequently, Kos and Barr entered into three separate but interrelated contracts–a settlement and licensing agreement, a co-promotion agreement, and a manufacturing agreement–resolving the litigation.

Direct purchasers and end payors filed a series of putative class action suits against Kos and Barr, alleging that the defendants entered into an illegal contract in restraint of trade under which Kos paid Barr substantial consideration in exchange for Barr’s agreement to delay bringing its generic version of Niaspan to the market, in violation of sections 1 and 2 of the Sherman Act and state antitrust laws. Specifically, the end payor plaintiffs brought claims under the state laws of Alaska, Arkansas, the District of Columbia, Hawaii, Idaho, Kansas, Louisiana, Montana, Nebraska, New Mexico, South Dakota, Oklahoma, South Dakota, and Washington. In September 2014, the court granted the defendants’ motion to dismiss the end payor plaintiffs’ state antitrust claims.

In dismissing that state antitrust claims, the court found that the end payor plaintiffs lacked standing to assert claims under the laws of states in which they did not reside or in which they did not purchase Niaspan or reimburse their members for purchases of the drug. The plaintiffs moved for reconsideration of the order.

A motion for reconsideration must rely on (1) an intervening change in the controlling law; (2) the availability of newly discovered evidence; or (3) the need to correct manifest errors of law or fact, the court explained. The plaintiffs contended that reconsideration was warranted in light of the Third Circuit decision in Neale v. Volvo Cars of North America, LLC, 794 F. 3d 353 (2015).

The court noted that Neale did not disturb the well-settled proposition that at least one named plaintiff must have Article III standing in order to assert claims on behalf of absent class members. Consistent with the principle from Neale, prior decisions by courts in the district have ruled that named plaintiffs lacked standing to assert claims under the laws of the states in which they do not reside or in which they suffered no injury.

In this case, the end payor plaintiffs failed to allege that any one named plaintiff either resided in or made purchases of Niaspan in those specified states and therefore lacked standing to pursue those claims. Thus, Neale did not constitute an intervening change in the controlling law to justify reconsideration of the dismissal order, the court concluded.

The case is No. 13-MD-2460.

Attorneys: Andrew Coyne Curley (Berger & Montague PC) for Rochester Drug Co-Operative, Inc. Thomas M. Sobol (Hagens Berman Sobol Shapiro LLP) for Professional Drug Company, Inc. Howard J. Sedran (Levin Fishbein Sedran & Berman) for Value Drug Co. Kenneth A. Wexler (Wexler Wallace LLP) for United Food & Commercial Workers Union, and Midwest Health Benefits Fund. Steve D. Shadowen (Hilliard Shadowen LLC) for United Food and Commercial Workers Local 1776 & Participating Employers Health and Welfare Fund. Karen N. Walker (Kirkland & Ellis) for Barr Pharmaceuticals Inc. Colleen D. Lynch (Drinker Biddle & Reath LLP), and Gregory M. Sergi (Munger Tolles & Olson LLP) for Kos Pharmaceuticals, Inc.

Companies: Rochester Drug Co-Operative, Inc.; Professional Drug Company, Inc.; Value Drug Co.; United Food & Commercial Workers Union; Midwest Health Benefits Fund; United Food and Commercial Workers Local 1776 & Participating Employers Health and Welfare Fund; Barr Pharmaceuticals Inc.; Kos Pharmaceuticals, Inc.

Cases: Antitrust PennsylvaniaNews